GameStop (NYSE:GME) stock rose close to 14% in extended trading on March 26. The company reported its earnings for the fourth quarter of fiscal 2019, which ended on February 1, after the market closed on Thursday.
On Thursday, GameStop stock rose 5.8% and closed at $4.41. Based on the last closing price, the company has a market cap of $290.7 million. The stock price has risen 5.3% in the trailing five-day period, while it has fallen 57.4% in the trailing 12-month period.
Currently, GameStop stock is trading 57.7% below its 52-week high of $10.42 on April 1, 2019. The stock is also trading 40.0% above its 52-week low of $3.15 on August 15, 2019. On a year-to-date basis, the stock has fallen by 27.5% as of Thursday.
In the fourth quarter of fiscal 2019, GameStop reported revenue of $2.19 billion with adjusted EPS of $1.27. In the same quarter the previous year, the company reported revenue of $3.06 billion with an adjusted EPS of $1.45. Analysts expected that the company would report sales of $2.24 billion and adjusted EPS of $0.79 in the fourth quarter. GameStop’s comparable-store sales fell by 26.1% in the fourth quarter of fiscal 2019. During the quarter, GameStop’s hardware and accessories sales fell 32.5%, while its software sales fell 27.8%. Meanwhile, the company’s collectibles revenue declined by 9.2%.
GameStop’s growth projection
In the fourth quarter fiscal 2019 press release, GameStop CEO George Sherman said that the company witnessed a positive impact from the coronavirus outbreak. He said, “The COVID-19 outbreak has led to changes in how consumers work, play and learn and over the past few weeks, led to increased demand for our products. While still early, we are pleased with the progress we have made to date in our initiatives to stabilize, optimize and transform the business, specifically the strengthening of our balance sheet.” He also said, “we will maintain our focus on expense and inventory discipline so that we move forward with a strengthened platform to capitalize on the significant opportunities we see for growth.”
GameStop suspended its outlook for fiscal 2020 amid coronavirus uncertainty. Wall Street analysts expect the company to post sales of $1.28 billion in the first quarter of fiscal 2020. The figure would mark a fall of 17.2% YoY (year-over-year) compared to $1.55 billion in the first quarter of fiscal 2019. Also, analysts expect the company to post an adjusted EPS of -$0.18 in the first quarter of fiscal 2020 compared to $0.07 in the same period last year. Currently, analysts expect -7.1% and 5.2% growth in the company’s fiscal 2020 and 2021 sales, respectively. Meanwhile, they expect an adjusted EPS of $0.20 and $0.47 in fiscal 2020 and 2021, respectively.
Analysts’ recommendations for GameStop stock
According to the latest recommendations from ten brokerage firms surveyed by Reuters, seven of the analysts recommend a “hold,” while three recommend a “sell.” None of the analysts recommend a “buy.”
Analysts have an average target price of $4.01 on GameStop. The target price implies a return of -9.1% based on the closing price of $4.41 on Thursday. The consensus target price for the stock declined from $4.43 in February. The lowest target price estimate is $1.60, while the highest is $5.50.
GameStop’s stock returns
On Thursday, GameStop stock was trading 10.0% above its 20-day moving average of $4.01. Meanwhile, the stock is trading 8.4% above its 50-day moving average of $4.07 and 11.4% below its 100-day moving average of $4.98. The stock’s 14-day relative strength index score of 56 indicates that the stock isn’t overbought or oversold.
GameStop has an upper Bollinger Band level of $4.56. The company’s middle Bollinger Band level is $4.01, while its lower Bollinger Band level is $3.47. On Thursday, the stock closed near its upper Bollinger Band level, which indicates that the stock is overbought.
Currently, GameStop stock is trading at 21.90x its fiscal 2020 estimated EPS of $0.20. The stock is trading at 9.46x its fiscal 2021 estimated EPS of $0.47.
On Thursday, the S&P 500 and the Dow Jones Industrial Average rose 6.2% and 6.4%, respectively. The broader index gained due to hope about the $2 trillion economic stimulus package amid the coronavirus pandemic. Read Is the US Stock Market Crash Worse than China’s? to learn more.